RESEARCH: Coated steel, tinplate prices continue surge ahead of contract re-negotiations

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Recent weeks have largely been a repetition of the weeks leading up to our previous tracker in mid-April. A flurry of price increases have been announced, and largely obtained, by leading steelmakers in both Europe and the United States while buyers struggle to secure spot tonnages.
Although steel output is rising in both regions, it still remains low relative to the rise in demand that has occurred in recent months and it is unlikely that the market will move closer to balance until September, by our calculations.
Buyers face such difficulty securing spot tonnages in Europe and the US that prices have risen as a result, while imports from large suppliers in China are looking increasingly viable, despite the large anti-dumping duties these products bear in both Europe and the US. This is a symptom of the short-term irrational behavior in many global steel markets at present although the increased competitiveness of imports from China will not resolve the situation any time soon given the extended shipping times and increased freight costs. Prices of flat-rolled steel are rising in Asia as well.
Given the sharp run-up in pricing, the likelihood of a sharp pullback later this year only continues to increase. With steelmakers’ margins at record highs, the incentives to increase output are intensifying. The worry is that a deluge of supply will arrive just as demand growth begins to pare back. Once end-users and distributors bolster inventories, one wonders whether end-use demand from consumers will continue to support prices, particularly should job-support schemes and payments related to the economic effects of the Covid-19 pandemic come to an end later this year.
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Alistair Ramsay

aramsay@fastmarkets.com

Robert Cartman

rcartman@fastmarkets.com

Published

Alistair Ramsay

Robert Cartman

May 17, 2021

11:12 GMT

London, New York